risinG Asset PoVerty;diminishinG finAnciAl security
By any measure, poverty in the United States is increasing. In 2010, the countrysaw the poverty rate or individuals rise to 15.1 percent, the highest level innearly two decades. More than 46 million people now live below the ederalpoverty line o $22,350 or a amily o our. However, the ocial poverty ratereleased annually by the Census Bureau highlights just one aspect o householdnances, namely the percentage o people with insucient income to covertheir day-to-day expenses. It does not count the number o amilies who haveinsucient resources – money in the bank or assets such as a home or a car –to meet emergencies or longer-term needs. When these longer-term needs areactored in, substantially more people in the United States today are acing auture o limited hope or long-term nancial security.According to the 2012
Assets & Opportunity Scorecard
, 27 percent o households– nearly double the percentage that are income poor – are living in “assetpoverty.” These amilies do not have the savings or other assets to cover basicexpenses (equivalent to what could be purchased with a poverty level income)or three months i a layo or other emergency leads to loss o income. Since therelease o the 2009-2010
Assets & Opportunity Scorecard
, the number o asset pooramilies has increased by 21 percent rom about one in ve amilies to one inour amilies. At a time o widening income disparities between the richest andpoorest households, these data paint a stark picture o diminishing nancialsecurity or millions o amilies.For the rst time, the
also includes a measure called “liquid assetpoverty,” which excludes assets such as a home, business or car that can’t easily be converted to cash, and consequently provides a more realistic picture o theresources amilies have to meet emergency needs. According to that measure,43 percent o households nationwide are “liquid asset poor” with little or nosavings to all back on i emergency strikes.
cfed: Assets & oPPortunity scorecArd WhAt is AssetPoVerty?
A household is considered
i it does not havesufcient net worth (totalassets minus total liabilities)to live at the poverty level orthree months in the absence o income.A household is considered
q a p
i it doesnot have sufcient liquid assets(e.g., bank accounts and otherfnancial assets) to live at thepoverty level or three monthsin the absence o income.The level o assets needed tolive at the poverty level or threemonths varies by amily size. Forexample, a amily o three wouldneed at least $4,632.The concept o asset povertyis important in that it measuresnot only income but alsovulnerability to fnancial shocks.I one’s income was suddenlycut o, due to unemployment,a medical emergency or evendivorce, would they have enougho a personal saety net to makeends meet?
of Nevadahouseholds areasset poorStates with the Worst Povertyof Alabamahouseholds areliquid asset poor
AssetpovertyHousehold* income povertyAssetpoverty forhouseholdsof color
* Households, rather than individuals as in the ofcial income poverty rate, are theunit of analysis for all
income and asset poverty data.
Liquid assetpovertyLiquid assetpoverty forhouseholdsof color
Income and Asset Poverty in America
of Mississippihouseholds areincome poor